Brian Moynihan, the CEO of Bank of America (NYSE:BAC), fired a warning shot to investors last week when he said that Q2 results might come in lower than expected. In this article, we analyze why the Q2 earnings may disappoint. Just as BofA has been helped by surging Treasury yields, boosting net interest income (NII), BAC is now feeling the sharp sting of lower yields. The result is likely to be lower loan spreads and lower NII.

In this analysis, we calculated the average 10-year yield for the last two-quarters and compared those averages to the Q2 average to date. The average quarterly yield smooths out extreme price movements and provides us with a better sense of how Bank of America should perform in Q2. For the full analysis and the impact on Bank of America’s stock, please click the link below.